BRIEF HISTORY
In the year 1944, an International Bank of Reconstruction, which is now known as the World Bank, was devised as an independent financial body that aimed to provide financial assistance, methodically, for the reconstruction of war-devastated Europe. During the same period, International Monetary Fund was established for the similar purpose. It is evident that the World Bank’s scope and functions have dramatically increased, since the emergence of the Bretton Wood’s system. Also, the World Bank became an independent Specialized Agency of United Nations[1].
STRUCTURE OF WORLD BANK
World Bank’s structure is a consequence of its functions. For instance, the two intra-organizational institutions are International Bank of Reconstruction and Development (IBRD) and International Development Association (IDA). These two bodies provide loans to the governments of the member states. However, at the time, three more institutions have emerged, which have influenced the structure of the World Bank[2]. These three institutions are;
- The International Financial Corporation: Developed in the year 1956, it emphasizes the development of private sector and sustainable economic growth through expansion of the private sector of a particular country.
- The International Centre for Settlement of Investment Disputes: It is one the smallest intra-organizational institution, which is devised with the intention to resolve a dispute between member states or entities and member states.
- Multilateral Investment Guarantee Agency: It has been formed to facilitate Foreign Direct Investment, which is considered the engine of economic growth and instrument to improve the quality of the economy.
All these intra-organizational intuitions give structure to the World Bank, and it is evident that with the devising of new intra-organizational institutions, the structure of the World Bank has changed drastically, in comparison to what it was in 1946.
FUNCTIONS OF WORLD BANK IN CONTEMPORARY TIMES
World Bank performs some functions, which are sanctioned by the United Nations. As the world’s political, economic systems are evolving, so does the role and functions of the World Bank. For instance, it was developed with specific objectives and had a limited role; reconstruction of Europe. However, it was realized, later, that emerged political-economic system would require an independent financial institution, such as the World Bank, for meeting a range of economic objectives[3].
- One of the primary objectives, of the World Bank, assists such member countries, which need financial aid for reconstruction and economic development. To war-torn countries or to the countries that have been devastated by natural catastrophe, the World Bank provides financial assistance, in a prescribed manner. For instance, World bank provided aid to Pakistan, when it was severely affected by the earthquake, of high magnitude, which caused death and destruction at biblical scale.
- Economic Development, of member countries, is one of the significant concerns of World Bank and its provided various kinds of financial assistance to developing countries, which are members of the United Nations. All the plans or designs, of financial assistance, have a criterion and a method to them. The investment of Capital aims to intensify economic activity and productivity in various sectors of the economy [4].
- World Bank also gives guarantees of particular kinds of projects that are of a sensitive nature and have a high social-economic impact. For instance, the World Bank is a guarantor of Indus Water Treaty. Also, it also gives guarantees of financial nature, which allow borrowers to access those markets too, which it cannot access on its own.
- World Bank also affects the economy, in a very efficient manner, by issuing long-term Long-term loans are usually at low cost/interest, which allows governments/states to produce different kinds of results, short and long-term, at very minimal cost. Therefore, it can be said that long-term loans are a type of instrument.
ECONOMIC IMPACT OF WORLD BANK
The sheer size and enormity of capital give World Bank not only the legitimacy but also the influence. Since its establishment, it has provided financial assistance, of various natures, to both developed and developing countries. For instance, the World Bank has facilitated a massive power infrastructural project in Kenya, which not only aims to provide electricity to 21 marginalized countries of Kenya but also intends to develop the private sector of Kenya through that project. As per various studies, of both World Bank and independent agencies, this project and its sub-components would facilitate to 1) reduce poverty, 2) increase investment and 3) expand the private sector [5]. Furthermore, this project intends to promote alternative power infrastructure as a viable solution. From this, it is quite apparent that World Bank not only intends to expand the economy, of a particular country but also intends to improve it qualitatively[6].
Recently, Greece, which economy is in turmoil since the start of the Great Recession, has approached the World Bank for the case. Though International Monetary Fund and European Central bank are assisting Greece to cope with post -Recession challenges; however, it still needs the assistance of the World Bank to solve this prolonged crisis. It is quite apparent, from these examples, that role of the World Bank, in this globalized economy, is immense and it has the potential to increase the economic growth, of a particular country, and improve its quality. However, because of some political factors, it may still not be realizing its potential as a global institution[7].
Work Cited
[1] UN.Org. “The United Nations-World Bank Partnership.” United Nations. United Nations.Org, 1 November 2017. Web. 19 November 2017. http://www.un.org/en/peacebuilding/pbso/unwb.shtml.
[2] Internationaldemocracywatch.org. “World Bank.” International Democracy Watch. International Democracy Watch, 1 November 2017. Web.19 November 2017. http://www.internationaldemocracywatch.org/index.php/world-bank.
[3] The Wall Street Journal. “World Bank Responsibility.” The Wall Street Journal. The Wall Street Journal,28 March 2009. Web. 18 November 2017. https://www.wsj.com/articles/SB123819888024662027.
[4] Demos, Telis. “World Bank Takes on Trading With $3 Million Investment.” The Wall Street Journal. The Wall Street Journal, 6 June 2017. Web. 18 November 2017. https://www.wsj.com/articles/world-bank-takes-on-trading-with-3-million-investment-1496786641.
[5] The World Bank. “Kenya: Off-grid Solar Access Project for Underserved Counties.” The World Bank. The World Bank.Org, 1 November 2017. Web. 18 November 2017. http://projects.worldbank.org/P160009/?lang=en&tab=details.
[6] Somaney, Jay. “World Bank Global GDP Growth Forecast A Reason For Cautious Optimism.” Forbes. Forbes, 11 January 2017. Web. 18 November 2017. https://www.forbes.com/sites/jaysomaney/2017/01/11/world-bank-global-gdp-growth-forecast-a-reason-for-cautious-optimism/#63b6fab4e32f.
[7] Mitchell, Daniel J.” Data in New World Bank Report Shows that Large Public Sectors Reduce Economic Growth.” Forbes. Forbes, 9 February 2012. Web.18 November 2017. https://www.forbes.com/sites/danielmitchell/2012/02/09/data-in-new-world-bank-report-shows-that-large-public-sectors-reduce-economic-growth/#184b9ca6499b
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